Term Insurance is another commonly used name for life insurance.
The word "Term" simply signifies that the life insurance cover remains in place for a pre-agreed length of time, its "term". Once the policy reaches the end it its term, the policy is finished and the policy has no monetary value whatsoever.
In practice, most life insurance policies run for between 10 and 25 years but the term you need depends how old you are and why you are taking out the insurance. You can start a life insurance policy anytime after your 18th birthday, although the insurance companies rarely agree to a policy terminating after the policyholder's 65th birthday.
In general, people maintain their life insurance cover for as long as they can as the cover becomes more important the older they become.
However, if the policy is just being used to protect a mortgage, then the policy's termination date usually terminates on the same date that your mortgage is planned to be fully repaid. Sometimes you may decide to run a policy beyond that date in order to provide further financial protection for your family.
Of couse, you can terminate a life insurance policy at any time and without any penalty. All you have to do is stop paying the premiums!
|
